Commercial Bank Intermediation

Basil John Moore

Chapter 10 in Shaking the Invisible Hand, 2006, pp 215-237 from Palgrave Macmillan

Abstract: Abstract It is important to recognize at the outset that banks are “retailers” of credit in imperfectly competitive markets. They are not “portfolio managers.” Like most retailers, banks are price-setters and quantity-takers in their retail markets. The quantity of credit that banks provide depends on the quantity of credit demanded by borrowers whom the banks have judged to be credit-worthy, and the lending rate set by the banks. In contrast to the mainstream view, it is not bank depositors but bank borrowers who initiate the changes in bank asset and liability portfolios.

Keywords: Interest Rate; Money Supply; Bank Loan; Bank Credit; Bank Deposit (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1057/9780230512139_10

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